East Hampton Town has been paying for health insurance for ex-employees who are not entitled to it, according to an in-house audit by the town’s budget office.
The review of bills for health benefits revealed that the town has also paid for some ex-employees who opted to pay for town insurance themselves through the COBRA program, but who didn’t pay the bills, and even for some deceased retirees, or spouses who had died, in some cases for several years.
Because the New York State Health Insurance Program will only reimburse payments made in error going back six months, the town will lose about $55,000 in unwarranted payments.
In addition, because the budget office found 194 retired employees receiving benefits this year, rather than the 169 who were actually budgeted for, the town board will have to spend another $340,000 on health benefits in 2011. The extra money will need to be transferred from contingency or surplus funds from other budget lines.
Charlene Kagel, an accountant for the town, and Len Bernard, the budget officer, presented their findings at a town board meeting on Tuesday, and the board is expected to approve a budget modification at its meeting tonight.
The cost of health insurance for the town’s employees, current and retired, and their families, is a big-ticket item, totaling about $6.6 million a year, more than one-tenth of the town’s $64 million budget for this year.
Reports provided by the town’s Department of Human Resources on “inactive” employees receiving benefits last fall, when this year’s budget was being prepared, showed 169 people in that all-inclusive category. However, Ms. Kagel said, a “census” submitted by the department later in the year indicated that there were 134 inactive employees on the benefits list.
“It became clear to us that there was really no internal database for tracking this benefit,” Ms. Kagel said.
A review of the state insurance bill from May of this year, she said, showed the town was being billed for coverage for 206 inactive employees.
Further investigation showed a number of problems with the records, leading to inaccurate billing and payments, she said. Some employees who had left were still on the tab, including one who has not worked for the town since 2008, leading to some $30,000 in mistaken payments for that person alone.
Some retired employees were still listed as “active” in the Human Resources Department records. And, Ms. Kagel said, “There were a lot of people on [the list], who we were paying for coverage for, who are deceased.” Those numbered about half a dozen, she said.
Town Supervisor Bill Wilkinson expressed his frustration at the meeting on Tuesday about the failure to accurately monitor retirees and their benefits.
“There will be follow-up action on all of this,” he said. Following the work session the board met in executive session to discuss a personnel matter, but did not indicate whether the subject was Pat Breen, the Human Resources Department head, or other employees. Ms. Breen did not return a call for comment.
“Some of this just doesn’t pass the sniff test,” Mr. Wilkinson said Tuesday. Town Councilwoman Theresa Quigley noted, however, that part of the problem stems from the town’s system of disparate departments, each with its own person in charge.
“While each individual person is well-intentioned and does a good job,” she said, “there’s a lack of cohesion within the town.”
Ms. Kagel said that though the town’s integrated software program has been used to catalog information on current employees, data about retirees had not been entered into it.
Under previous administrations, she said, the cost of employee benefits as a whole was included in its own part of the town budget. Now, she said, each paycheck and benefits expenditure is broken down, per employee, and included in the appropriate department’s budget.
While previously, the percentage of annual NYSHIP insurance cost hikes was simply added to the lump sum budgeted for benefits, Mr. Wilkinson said he had instituted a zero-based budgeting procedure, through which each expenditure is assessed before it goes into the budget. “Had we not gone into zero-based budgeting — this is what happens,” he said.
“We would have continued to overpay, without any accountability,” said Councilman Dominick Stanzione, thanking Ms. Kagel and Mr. Bernard for their work.
“What it sounds like is there was no system, until we came in,” Ms. Quigley said.
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year because of the cost. He said the increase is only for full-fare riders, not those who receive a discount, like students or senior citizens. The 10A bus, which runs from Bridgehampton to East Hampton, is not yet slated for Sunday runs, but that could be in the cards.
According to Kathleen Cunningham Faraone of East Hampton, a Five Town Rural Transit board member, it is not a social issue. “I think there’s an impression that only poor people ride the bus,” she said. “That is simply not true.” She mentioned another board member, Vince Taldone of Riverhead, who has problems with peripheral vision and therefore cannot drive.
“Think of how frustrating it would be if you were transit-dependent and you couldn’t get to your family’s on a holiday, or to work on Sunday,” she said.
Mrs. Faraone complimented Mr. Schneiderman, along with County Legislator Ed Romaine of Center Moriches, for getting it done.
“For us, it’s the first tiny step toward a rail-and-bus network for the East End,” she said. “It is so exciting.”